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First Cut: Sales of new single-family homes declined 6.9%, unwinding the burst of activity in the prior month

Sales of new single-family homes retreated 6.9% in April to 673,000 after a burst of activity driven by lower mortgage interest rates helped pushed sales higher to 723,000 in March. However, the April reading remains a healthy one relative to slower conditions last year and represents a 7.0% rise year-over-year.

The report included annual revisions back through 2014.

Sales were down in three of four regions in April. There were similar declines for the West (down 8.3%), Midwest (down 7.4%), and South (7.3%) that were probably due to consumers moving to exercise some pent-up demand in the prior month with a return to a more sustainable pace for April. Sales were up 11.5% in the Northeast.

The median price of a new home was up 11.9% in April from March, and up 8.8% year-over-year. The average price was up 5.7% month-over-month, and 2.2% higher than April 2018. Some of this will be due to increased construction costs for labor and materials, but it also seems to reflect a shift to sales of larger and more expensive homes. In part it may be that consumers are opting for bigger houses while affordability is enhanced by lower mortgage rates.

New construction is not keeping up with sales as supplies of homes are limited. Out of the 673,000 homes bought in April, 220,000 were for homes not yet started, and 213,000 were for homes under construction, with 240,000 completed units sold.

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